Сделай Сам Свою Работу на 5

Foreign Trade in the World Economy





The world economy is increasingly becoming a single economic unit. Individual national economies are developing closer linkages through trade, capital investment, and financial institutions. Multinational corporations spread their activities across national boundaries, and the international banking system carries on banking activities throughout the world.

During the last two decades, while world output has been growing about 4% per year, world trade has been growing about 8% and production by foreign subsidiaries has been growing by some 10%. Export and import shares of output have increased considerably in practically all industrial sectors. A growing percentage of world trade is becoming intra-industry trade (reflecting economies of scale and increased demand for differentiated products) and even intra-firm trade by transnational firms (reflecting decomposition of production activities around the world).

As nations engage in world trade, some of them end up with a favourable balance of trade, in which exports exceed imports, and others have an unfavourable balance of trade, in which imports exceed exports.

Economists today recognize that a nation that sells abroad must also buy from foreign nations, in order to give them its currency to use in purchasing its goods.

History also reveals a correlation between the economic development of a nation and the status of its balance of trade. Emerging or developing nations are generally heavy importers especially of machinery, equipment, and various types of finished goods. Exports in a nation's early stages of economic growth generally consist largely of raw materials from the nation's natural resources. A developing nation, lacking aid and investment capital, must finance imports by diverting sufficient quantities of natural resources and agricultural commodities from domestic to foreign (export) uses. As a country develops and is able to produce more of its own capital and finished goods, it will have less need for imports and an even balance of trade may come about. Finally, with its debts liquidated, a fully developed industrial nation tends to be a large exporter of capital. Consequently, a nation may shift from being a longtime debtor to being a creditor as its balance of trade shifts from one side to another.



More important than balance of trade in international economics is the balance of payments. Although the flow of merchandise constitutes a major category on international transactions, it constitutes only part of a nation's balance of payments.

The balance of payments is a statistical account (current and capital) of the financial transactions between nations over a period of 1 year.

Most transactions in the current account involve the purchase and sale of goods and services: income from merchandise trade and income generated from services performed by one country for another. The current accounts include investment income, interest, dividends, corporate profits and military transactions. The final item in the current account consists of unilateral transfers (foreign aid, emergency relief etc.).

The capital account depicts the flow of capital investments between nations: the purchase and sale of physical assets and financial assets.

Any international transaction that provides a claim for payment from another country is entered as a credit in the balance of payments of a given country and recorded with a + sign. Conversely, a debit is recorded whenever a transaction gives rise to a claim by foreign countries for payment from a given country. Debit transactions are designated by a -sign.

1. What is the balance of trade and how is it correlated with the economic development of a nation?

2. What is the balance of payment and why is it more important than balance of trade in international economies?

3. What is the current account and what is the capital account?



4. What is debit and credit?

 

Text 3

Read the text. Be ready to speak on the four basic methods of payment. Characterize each of them. Retell the text.

Methods of Payment

There are four basic methods of payment - each providing varying degrees of security for the exporter.

Payment in advance. Clearly the best possible method of payment for the exporter is payment in advance. Cash with Order (CWO) avoids any risk on small orders with new buyers and may even be asked for before production begins However, this form of payment is extremely rare in exporting since it means that an overseas buyer is extending credit to an exporter - when the opposite procedure is the normal method of trade.

Variations of this form of payment are Cash on Delivery (COD) where small value goods are sent by Post Office parcel post and are released only after payment of the invoice plus COD charges.

Open account.An exporter receives the greatest security of payment from cash with order or from cash on delivery. At the other extreme, payment on open account offers the least security to an exporter.

A bill of exchange (which is also referred to as a draft) is legally defined as "an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay on demand or at a fixed or determinable future time a sum certain in money to, or to the order of, a specified person.

The bill is called a sightdraft if it is made out payable at sight, i.e. "on demand". If it is payable "at a fixed or determinable future time" it is called a term draft, because the buyer is receiving a period of credit, known as the tenor of the bill. The buyer signifies an agreement to pay on the due date by writing an acceptance across the face of the bill.

Letters of Credit. In any international trade transaction security is of prime importance to both importer and exporter. The exporter wants to ensure that payment will be made for any goods supplied, while the importer wishes to be satisfied that payment will be made only after dispatch of the goods. By using a letter of credit (also known as a documentary credit) both parties have a considerable degree of security in the commercial contract because it is honoured through the banking system.

An irrevocable letter of creditmay be defined as an undertaking by an issuing bank (the importer's bank) to an exporter, through an advising bank, normally in the exporter's country, that the issuing bank will pay for the goods, provided the exporter (the beneficiary) complies precisely with all the terms and conditions of the credit.

Irrevocable credits can be either confirmed or unconfirmed, offering varying degrees of security for an exporter. An unconfirmed irrevocable credit is a commitment on the part of the issuing bank in the overseas country, whereas a confirmed irrevocable credit constitutes an undertaking on the part of the confirming bank as well as that of the issuing bank.



Text 4

Read the text. Draw the tree- diagram of the text.Be ready to summarize the text according to the diagram.

Trade Contract

Care must be taken in negotiating contracts for the purchase of raw materials and products, and the importing company should, whenever possible, take legal advice before signing an agreement which could conceivably contain clauses not in the best interests of the importer. Because of the hundreds of thousands of contracts for regular merchandise that are concluded internationally in the course of a year, most traders use one or other of the standard sets of contract conditions that have been proved and tested for that purpose. The British Importers Confederation has issued a list of the most important items to be included in any contract. These take in:

Description. A clear description of the goods, their price and quality must be given in detail.

Price. This might cover more than the cost of the goods, and unless agreed in advance importers could find transport, insurance and other items included in the price.

Specifications. These must comply with UK regulations, particularly those relating to standards, health, safety, agriculture and defense.

Payment. Not only the method of payment (in advance, by open account, by collection or by letter of credit) but also the due date of payment must be included.

Packing. It is essential that the goods are transported, marked, packed and stored correctly and in such a manner as to be fully protected –. whether they are carried by road, rail, ship or aircraft. Packing must conform to international standards and must comply with Customs regula­tions.

Transportation. The method is an important consideration, especially if it is included in the price of the goods, so that the alternative methods must be investigated. Much will depend, however, on the type of product and the variety of transport available from the point of supply.

Delivery. Whether the goods are delivered in one consignment or by instalments over a set period, the date(s) and quantity must be stipulated in the contract. It is also advisable to include an inspection clause. This will give time following the arrival of the goods for an inspection and a claim for compensation if they are not in order.

Insurance. Whether insurance is the responsibility of the supplier or the importer must be decided in advance. Proper insurance cover, for the whole period and the different stages of transportation, is vital.

Law.Included in the contract must be the law of the country under which it will be enforced - preferably this should be English Law.

 

Text 5

Read the text. Translate the words and expressions given both in bald and italics. Write down 15 statements (both true and false) and let the class identify them and correct the false ones. Be ready to explain the difference between elastic and inelastic demand.

 








Не нашли, что искали? Воспользуйтесь поиском по сайту:



©2015 - 2024 stydopedia.ru Все материалы защищены законодательством РФ.